Sebelius’s Phone Soliciting May Have Been Illegal

Health and Human Services Secretary Kathleen Sebelius confirmed in testimony to Congress that she had solicited funds from two groups for Enroll America, a nonprofit working to implement the Patient Protection and Affordable Care Act and run by a former Obama aide, in a possible violation of ethics rules governing such actions.

In her June testimony to the House Education and Workforce Committee, Sebelius said she contacted two groups HHS does not regulate—the Robert Wood Johnson Foundation and H&R Block. But she also called three HHS regulated groups—Ascension Health, Johnson & Johnson, and Kaiser Permanente—to “discuss [Enroll America] and suggest that the entities look at the organization.”

Sebelius claims she did not solicit funds from these organizations, but investigators are looking into these claims, as well as the nature and legality of her calls.

A May 10 Washington Post article, which alerted Congress to the issue, said Sebelius had contacted several groups, including some in the health care industry, and “asked that they contribute whatever they can to nonprofit groups that are working to enroll uninsured Americans and increase awareness of the [health care] law.”

The Post article also quoted Ellen Murray, assistant secretary for financial resources at HHS, saying the department has “had to come up with a Plan B” after Congress twice refused funding for PPACA implementation.

In response to the article, the House Energy and Commerce Committee launched its investigation on May 13, since expanding it in the wake of additional remarks from Sebelius. At issue is whether her efforts to supplement the funds appropriated to HHS by Congress through outside fundraising are an ethical violation. The committee sent letters requesting information and documentation to Sebelius, Enroll America, and 17 companies and organizations, including Johnson & Johnson, Ascension Health, and many others in the health care industry.

Sebelius denied soliciting funds from anyone in the health industry or any entity regulated by HHS, at the June 4 hearing. She also said she was working to form “exactly the kind of public-private partnership that we always anticipated would happen” with PPACA, and claimed she was not raising funds for HHS but for “enrollment and outreach activities so Americans can connect with the benefits.”

Campaign Connections

Although Enroll America is, strictly speaking, a private nonprofit, it has close ties with Obama’s campaign and administration. These ties raise concerns the nonprofit could effectively become a branch of the Obama administration, pursuing the same ends HHS would if Congress appropriated funding, and which the denial of funding is supposed to prevent.

Anne Filipic, president of the Enroll America, worked for the Obama administration as Deputy Director of Public Engagement, in which position she built relationships between “constituency group leaders” and the federal government. She also held positions with the Democratic National Committee, HHS, and the Obama campaign.

Nancy-Ann DeParle formerly served as head of the White House Office of Health Reform and as Obama’s Deputy Chief of Staff. No longer at the White House, she is now working to raise money from insurance companies for Enroll America.

Checks and Balances Ignored?

Sebelius’s actions may have violated the Antideficiency Act and the “rule against augmentation of appropriations,” according to a May 16 letter to Gene Dodaro, comptroller general in the Government Accountability Office.

These regulations protect Congress’s “power of the purse,” which checks executive power by requiring congressional approval of funding for any federal agency.

Her actions may also have violated “federal ethics rules against fundraising from regulated entities,” according to the letter, signed by Republican Sens. Lamar Alexander (TN) and Orrin Hatch (UT) and Reps. Fred Upton (MI), Dave Camp (MI), and Jack Kingston (GA).

“The Secretary’s actions show an apparent disregard for constitutional principles,” the letter states.

Propriety, Not Legality?

Sebelius’s actions may be more a question of propriety than legality, said Jonathan Adler, director of the center for business law and regulation at Case Western Reserve University’s School of Law.

“I have not seen a case laid out that I find convincing that she broke the law,” Adler said. “I’m not saying it’s a good idea. I’m just not convinced that what she’s done is either illegal or categorically different from what her predecessors have done.”

It’s “certainly possible” that as more information comes in, a solid legal case could be made against her, Adler said, but as of yet he isn’t convinced, “both because there is precedent for this sort of thing and there is at least arguable statutory authorization.”

“The real question would be whether or not there’s any evidence that Sebelius was approaching companies that HHS regulates,” Adler said. “Then there would certainly be an ethical issue, or issues in terms of appearances, but I’m not convinced that there’s an actual legal problem. If it did appear that the secretary was strong-arming regulated companies,… that would raise concerns. But there are plenty of things that officials do that raise concerns but are perfectly legal.”